National Academies of Sciences, Engineering, and Medicine et al., Pain Management and the Opioid Epidemic (Washington, D.C.: The National Academies Press, 2017), https://www.ncbi.nlm.nih.gov/books/NBK458661/.
401Ronald S. Litman et al., “Abuse-Deterrent Opioid Formulations,” Anesthesiology 5, no. 128 (2018): 1015-26, accessed Oct. 15, 2019. doi: 10.1097/ALN.0000000000002031, https://anesthesiology.pubs.asahq.org/article.aspx?articleid=2667599;
“Study Finds 22 Percent Decrease in Opioid Prescriptions,” AAFP, April 25, 2018, https://www.aafp.org/news/health-of-the-public/20180425opioidstudy.html.
402Richard A. “Red” Lawhern, “Stop Persecuting Doctors for Legitimately Prescribing Opioids for Chronic Pain,” Stat, June 28, 2019, https://www.statnews.com/2019/06/28/stop-persecuting-doctors-legitimately-prescribing-opioids-chronic-pain/;
“CDC Reiterates Limits of Opioid Prescribing Guideline,” PT In Motion News, April 10, 2019, https://www.apta.org/PTinMotion/News/2019/04/10/CDCClarificationGuideline/: (read comments section).
403Courtney Krueger, “Ask the Expert: Do NSAIDs Cause More Deaths Than Opioids?” Practical Pain Management, Nov./Dec., 2013, https://www.practicalpainmanagement.com/treatments/pharmacological/opioids/ask-expert-do-nsaids-cause-more-deaths-opioids.
404William M. Lee, “Acetaminophen and the US Acute Liver Failure Study Group: Lowering the Risks of Hepatic Failure,” Heptology 40, no. 1 (2004): 6-9, accessed Oct. 15, 2019. doi: 10.1002/hep.20293, https://www.ncbi.nlm.nih.gov/pubmed/15239078.
405John J. Murphy, “A Pain Specialist’s Perspective on the Opioid Epidemic: A Discussion with Dr. Mark Bailey,” MDLinx, Aug. 5, 2017, https://www.mdlinx.com/pain-management/article/1019;
Caring for Opioid Dependent Women in the Hospital Setting (Healthy Start Coalition of Flagler and Volusia Counties, Inc., 2016), https://www.healthystartfv.org/wp-content/uploads/2016/06/Opioid%20Addiction%20in%20Pregnancy%20and%20Postparum%20June%202016%20Final.pdf.
406Ronald S. Litman et al., “Abuse-deterrent Opioid Formulations,” 1015-26.
407“Clincal Alert: Generic OxyContin Delayed Tlil 2025,” myMatrixx, April 18, 2013, https://www.mymatrixx.com/clinical-alert-generic-OxyContin-delayed-till-2025/.
408Drugs tend to dissolve faster when their surface-to-volume ratio increases, which is what happens when a pill is crushed into a powder. Consider that granular sugar dissolves faster than a sugar cube. So making a drug that dissolves at the same rate regardless of its surface-to-volume ratio took some skill, though this breakthrough did not seem to be appreciated in the opioid marketplace.
409VM Kuma et al., “Impact of Abuse Deterrent Formulations of Opioids in Patients with Chronic Pain in the United States: A Cost-Effectiveness Model,” Value Health 22, no. 4 (2019): 416-22, accessed Oct. 15, 2019. doi: 10.1016/j.jval.2018.12.005, https://www.ncbi.nlm.nih.gov/pubmed/30975392.
410Alex Dasalla, “Collegium Provides Full-Year 2019 Financial Guidance,” P&T Community, Jan. 7, 2019, https://www.ptcommunity.com/wire/collegium-provides-full-year-2019-financial-guidance.
411Pradip K. Muhuri et al., “Associations of Nonmedical Pan Reliever Use and Initiation of Heroin use in the United States,” CBHSQ Data Review, SAMHSA, Aug., 2013 https://www.samhsa.gov/data/sites/default/files/DR006/DR006/nonmedical-pain-reliever-use-2013.htm
412“Overdose Death Rates,” National Institute on Drug Abuse.
413Abby Alpert et al., “Supply-Side Drug Policy in the Presence of Substitutes: Evidence from the Introduction of Abuse-Deterrent Opioids,” (NBER Working Paper No. 23031, 2017), https://www.nber.org/papers/w23031.
414William N. Evans and Ethan Lieber, “How the Reformulation of OxyContin Ignited the Heroin Epidemic,” Cato Institute, Aug. 15, 2018, https://www.cato.org/publications/research-briefs-economic-policy/how-reformulation-OxyContin-ignited-heroin-epidemic.
415Lindsey Vuolo, “The Federal Government Needs to Take Stronger Action to Prevent Discriminatory Coverage of Methadone,” Health Affairs, April 25, 2019, https://www.healthaffairs.org/do/10.1377/hblog20190418.164447/full/.
416German Lopez, “The Thousands of Lawsuits Against Opioid Companies, Explained,” Vox, Oct. 17, 2019, https://www.vox.com/policy-and-politics/2017/6/7/15724054/opioid-epidemic-lawsuits-purdue-OxyContin.
417We failed to appreciate how vaping, though much better for current smokers than cigarettes (assuming they can’t just quit), would get a generation of kids addicted to nicotine with a myriad of flavors and advertisements portraying vaping as hip. In retrospect, vaping should have been more tightly regulated, as it’s starting to be, with more effort to keep it away from kids and discouraging all non-smokers from picking it up.
418Clive Bates and Andy Rowell, Tobacco Explained (WHO), https://www.who.int/tobacco/media/en/TobaccoExplained.pdf.
419The FDA clearly has learned hard-won lessons through the opioid crisis. When in 2010 the agency decided not to approve the use of Xyrem to treat the large population of patients suffering from fibromyalgia, regulators probably had the opioid crisis on their minds. Those who wanted to abuse GHB would still be able to do so by getting it on the black market, but the FDA did not want to compound the problem by allowing millions of patients with fibromyalgia to be prescribed a version of that drug. I don’t know if the FDA was right in making that decision; fibromyalgia can be a debilitating, painful condition with few available treatments. But based on that decision, I see the FDA making an effort to do right by society.
420SAMHSA, 2017 NSDUH Annual National Report, accessed Oct. 15, 2019, https://www.samhsa.gov/data/report/2017-nsduh-annual-national-report.
421“Cigarette Health Warnings,” US Food & Drug Administration, updated Nov. 8, 2019, https://www.fda.gov/tobacco-products/labeling-and-warning-statements-tobacco-products/cigarette-health-warnings.
16
A Call to Action
So what exactly is novel about the Biotech Social Contract? What am I saying that hasn’t been said before by others?
Most importantly, it is the idea that, on a societal level, spending on branded drugs is not an expense tied to products delivered today, but an investment in the growth of a large and growing generic drug mountain that will serve humankind inexpensively for the rest of time. High out-of-pocket costs imposed by insurers are what violate the contract on an individual level. They deny many patients the appropriate treatments their physicians prescribe. Not only is this bad for patients, but, by making it harder for companies to commercialize their innovations, poor insurance coverage and high out-of-pocket costs endanger our investment in a vital, affordable resource that will improve the lives of future generations.
In a way, this whole book has been my attempt to reframe the entire drug pricing debate.
When the public’s reaction to branded drug prices being unaffordable for patients leads to talk of price controls, the biotech industry’s response is usually something like:
“But we must be allowed to charge high prices in order to keep developing new drugs, because they are expensive and risky to develop. Price controls will hurt R&D and reduce the number of new drugs that we can make.”
All of that is true, but this response has failed to answer the underlying question of affordability, both for the patient and society! The answer does not mention the long-term value of generics, nor does it make the case that patients can’t afford drugs because their insurance doesn’t want them to (if they even have insurance).
I propose the following response:
No, price controls on novel drugs are not the answer. To allow patients to afford what their physicians prescribe, we must ensure that all patients have insurance coverage and eliminate or cap their copayments and deductibles. Society should not be asking its most vulnerable members to shoulder, through high out-
of-pocket costs, a disproportionate share of our collective investment in biomedical innovation. To incentivize and fund the development of drugs that will eventually go generic and improve our standards of care for the rest of time, drug companies must charge temporarily high prices for new drugs, but those costs should be borne by society as a whole via universal, comprehensive insurance and not passed on to patients at the pharmacy counter. Insurance that makes treatments that a doctor prescribes unaffordable is not insurance at all. So the answer to making drugs affordable for patients is that we need to reform insurance in America to make it function as the insurance it’s supposed to be. As for price controls on novel drugs, they would only temporarily solve affordability of the drugs we have today but would then counter-productively slow or halt the expansion of our generic drug armamentarium, which would leave future generations with healthcare that is no better than what we have today and more expensive than it could be. Drugs going generic is the cost-containment mechanism we have long had and the only one we should rely on and optimize to ensure that drugs are cost-effective in the long run.
Call to Action
To preserve the Biotech Social Contract, I call for:
In exchange for legislation to solve patient affordability by reducing their out-of-pocket costs, the drug development industry must offer to society contractual genericization of otherwise non-genericizable drugs (Chapter 8). I proposed contractual genericization for the first time in an article on Medium just after Christmas 2017,422 and then described it again in BioCentury a year later in December 2018.423 Others called for it in April 2019 in a post on Health Affairs.424 If this is a start, then I admit it feels slow, but as I point out in Chapter 8, non-genericizable drugs currently represent a very small fraction of our total drug budget, so we have time to implement contractual genericization. I include a step-by-step framework for how contractual genericization could work at the end of Chapter 13.
A system of incentivizing upgrades of existing drugs that leverages shorter regulatory exclusivity extensions for the whole drug franchise rather than entirely new patents on straightforward, low-risk improvements. I describe how short extensions could integrate with contractual genericization at the end of Chapter 13.
A proposal for how society can take over marketing from companies when certain non-standard products like the EpiPen go generic (Chapter 12).
Caution when referencing US prices to those in Europe or elsewhere, since the likely result would, paradoxically, raise US prices (Chapter 10).425 I also reframe the relationship between the US and other countries by focusing on America’s goals, arguing that whatever the rest of the world pays for branded drugs is a subsidy that makes drugs more affordable for America. The conventional view is that the US subsidizes drugs for other countries, which makes it sound like we can stop doing that by just paying less, overlooking the negative consequence of such policies to American patients.
Mortgage-based cost-effectiveness modeling using a long time-horizon that takes into account the fact that a drug is only expensive for a relatively brief time but yields benefit forever after, often permanently reducing the utilization of healthcare services (which not only don’t go generic but rise rapidly in cost; Chapters 1 and 4).426
Ideas that I’ve discussed that have been proposed elsewhere are:
Capping or eliminating cost-sharing and ensuring that everyone has insurance, thereby allowing all patients to afford what their physicians prescribe and resolve a major point of controversy (Chapters 1 and 4).
Strategies to prevent price-jacking of sole-source generics, such as (a) requiring that companies provide samples to generic competitors and coordinate REMS and (b) guaranteed purchase contracting (functionally similar to contractual genericization), which could also be useful in cases of there being so few generic or biosimilar competitors that the price remains well above the cost of production (Chapter 9).
Reforming drug rebate practices so that payers are not better off encouraging higher list prices to misleadingly maximize room for rebates (Chapter 7).
Helping physicians make the best use of their time with patients by reducing time wasted on redundant data entry and enabling them to delegate more. The US should also train more primary care physicians and teach patients how to be more effective advocates for their own care (Chapter 12).
Installing a European-style 10-year exclusivity period (up from 5-7 years) for any new drug approved in the US that no longer has patent protection to incentivize investment in the drug’s development (Chapter 13).
Creating a market exclusivity extension voucher system to incentivize companies to upgrade the drug labels of old generics with data on how to put them to new uses (Chapter 13).427
Addressing the opioid crisis by making addiction treatment more widely available and affordable and investing in non-addictive drugs that treat pain.
Fostering trade negotiations between the US and other wealthy nations to encourage other countries, particularly wealthier ones, to contribute more towards supporting the global drug development industry. We can encourage them to pay for more branded drugs (not deny their own patients) and to approve reimbursement for branded drugs more quickly (Chapter 10). In today’s political climate, such discussions may seem hard to imagine, but they would not be unprecedented.
Specifically, there are some direct actions that scientists, executives, and other members of the drug industry can take to promote the Biotech Social Contract.
Continue to advocate for universal health insurance and capping or (ideally) eliminating out-of-pocket costs, which BIO and PhRMA already do. This is the first and only real answer to the question of how patients are supposed to afford high drug prices.
Celebrate the mountain of generic drugs that innovation has created. Whenever the discussion about drug prices shifts from what patients can afford to what society can afford, explain that drugs that go generic are far more cost-effective than any other aspect of healthcare. What society pays for branded drugs is an investment towards owning them as generics. Towards this end, our industry should celebrate the ongoing value and cost-effectiveness of generics with a Public Domain Day for Drugs (Chapter 2).
Advocate for internal reforms to ensure that drugs go generic without undue delay and stay affordable. When drug pricing discussions veer inevitably towards patent games and price-jacking, acknowledge these problems (Chapters 8 and 9) and embrace possible reforms, such as contractual genericization.
Write articles and opinion editorials that call for insurance reform to help patients afford medicines.428 Use these to rebut the usual, flawed arguments against drug prices in America (e.g., America can pay what Europe pays).
When companies model the cost-effectiveness of a drug, they should create mortgage-based models that project over an extended timeframe so as to capture the impact of genericization, instead of carelessly adopting conventional models that only judge a drug by its branded price, presuming it will always be that high.429
A Note to Members of the Biopharmaceutical Industry
The biopharmaceutical industry has long been and continues to be on the right side of history, turning biomedical knowledge into useful products. We treat and cure diseases for a living. Our inventions ease pain, prolong life, and make it possible for people to enjoy any other creative and joyful pursuit. Drugs are not without their risks, and we have caused harm along the way (Chapter 15), but the benefit-risk profile of all that the drug industry has accomplished is by any objective standard a positive one. As long as we continue to learn from our mistakes and make each generation of medicines better than the last, we’ll be driving forward important progress.
Healthcare in the US has become exceedingly expensive. Total healthcare spending, approaching 20% of GDP, is an enormous cost burden on society, families, and individuals. But there is no way that branded drugs, at just 1.3% of GDP, can’t be made affordabl
e to everyone through proper insurance.
That people are angry with the rising costs and perpetual inefficiencies of hospitals and clinics should be no surprise. Even if insurance paid for everything and eliminated out-of-pocket costs, insurance premiums and health-related taxes to cover healthcare services would remain high.
But medicines that keep people out of the hospital, spare them surgeries, and will someday go generic are part of the solution to high healthcare costs and represent only a minor societal expense. Were we to stop innovating and all current drugs went generic, society would indeed “save” money in the near term: Healthcare spending would drop by 5-7%. But resigning ourselves to what we have now without striving for better solutions for our children is a terrible way to save.
So if you work or will someday work at a biotechnology or pharmaceutical company, know that your work is important, valuable, and much more cost-effective than critics currently appreciate. And with insurance reforms, all patients will be able to afford what you can invent.
All it takes for our industry to honor the Biotech Social Contract is to ensure that our revenues continue to be linked to innovation as directly as possible, as the patent system intends them to be. That means that all drug companies must make sure that their drugs go generic without undue delay, shunning lifecycle management tactics that do not benefit patients.
What is and what isn’t a legitimate basis for seeking to delay genericization can be subjective, and every company may have a bias towards believing that it’s doing the right thing. But the world is watching and judging the entire industry by its response to any one company’s actions.
The Great American Drug Deal Page 31